Highlights:
Significant changes in powertrain and buying behavior impact global demand
Shift to hybrid and battery-electric vehicles impacts manufacturers, supply chain players and dealer networks.Continued supply chain disruption and volatility expected
Challenges restarting production and managing supply disruptions are creating bottlenecks and cost pressures for the industry.Global OEMs starting to reconsider their footprints
Expect consolidation throughout the sector – from manufacturers to dealer groups – as key players rationalize their global footprints.
Automotive industry insights
The global automotive industry is facing a ‘perfect storm’ of pressures that promise to fundamentally transform the sector: the shift from internal combustion to electric powertrains; the rise in popularity of ‘mobility’ options over car ownership; the increasing value of data over materials in car manufacturing; growing regulator and customer attention to ESG considerations; unexpected supply chain disruptions and supply constrictions – these challenges (and more) are all creating unprecedented disruption in the sector
For those heavily embedded in the traditional internal combustion value chain, the next few years will likely be challenging as business and operating models rapidly change and new innovations and competitors vie to capture new revenue streams. For newer players and those already pivoting to electric powertrain models, the future is expected to be no less challenging – re-orchestrating the value chain and transforming the business model requires massive changes to the organization’s footprint, supply chain and capabilities.
Don’t expect the disruption to end any time soon. All signs suggest this is only the beginning of a period of disruption that is likely to be marked by significant consolidation, new partnerships and fierce competition over new innovations and revenue streams. Having a trusted restructuring advisory team will be key.
How can KPMG help?
Keeping you on the road
When dealing with massive structural changes, you need advisors that can combine global industry experience with an intimate knowledge of local markets; you need teams on the ground quickly, working transparently and smartly to help ensure the right decisions can be taken in time; and you need the right information to understand all of your options and to help maximize your opportunities.
KPMG’s automotive restructuring professionals are trusted advisors to more than 120 major automotive industry participants and numerous mid-sized players around the world. KPMG's professionals are known for helping their clients deal with pressing issues such as cashflow, private equity, workforce management, mergers and acquisitions, re-onshoring and rationalization. And, supported by a global organization can help you accelerate your digital capabilities to support your future business.
Case studies
The situation:
This automotive aftermarket supplier had suffered significant negative market impacts and, due to the breakage of credit agreements, the company was at risk of not being able to pay suppliers.
The solution:
KPMG was engaged to act as the mediator between the banks and management, executing a robust independent business review that focused on analyzing the company’s short-term cash and liquidity situation. KPMG then outlined several options the company could take that would meet the requirements of the involved bank pool.
The outcome:
As a result of KPMG’s work, the company improved their liquidity optimization and put themselves in a better position to cope with future liquidity risks. The work also allowed the company to confirm its business plan, convincing the banks to prolong their existing lines of credit.
The situation:
When a Germany-based OEM was put up for sale by its parent company, the organization wanted to find a viable concept for the potential corporate takeover. Intensive financing negotiations were anticipated.
The solution:
KPMG was appointed to prepare the restructuring concept in accordance with IDW S6, and to conduct the due diligence. Working with professionals from the potential investor, KPMG created a set of restructuring alternatives for the merged group, supported by strategic business plans. KPMG then supported the financing negotiations with expert opinion and background information.
The outcome:
Not only did the organization develop a stable and sustainable restructuring plan in partnership with the investor, they also enhanced the organization’s overall public transparency and built trust in the future sustainability of the company.
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